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UPDATED 22/1/07

Valuation of Chaco Resources : 'Rule of Thumb' based on 550m shares and using 10% DCF on oil at $60/barrel is 1p on the sp for every 1m barrels (CHP's share) that is proved. Until oil reserves are proven the 1p/1m barrels will be discounted by the market.

Chaco Resources now has three exploration blocks in Colombia and three areas in Paraguay. The next year should see a steady news flow as it establishes the companys transformation from being an exploration company only to also becoming a significant oil production company. Set out below are some of the milestones which should produce announcements and have a positive effect on the share price. All reserves are quoted in recoverable oil assets.



Alea, Colombia :

25% interest in a field currently assessed at holding 38.1m barrels of light sweet crude oil. Drilling of the field by the operating partner, Ecopetrol, was programmed for 2006 to provide early cash flow, but a shortage of drilling rigs, then the rainy season and increased environmental requirements have caused a re-think and it is now expected that this block will be drilled in first half 2007.The proposal to drill a step out well as part of that drilling programme will also provide the opportunity to establish if the estimate of recoverable oil should be increased. (Some estimates suggest the field contains as much as 70m barrels.)

RNS : Updated w/c 30/4//07. Drilling contract should be imminent but actual drilling unlikely to take place second half 2007.



Puerto Lopez, Colombia :

54% Interest in a field containing light sweet crude oil.On 3.10.06 CHP announced that the original TEA area had been extended by the ANH to include further territory which it is expected will greatly increase the potential to find and exploit a structure which may contain as much oil as there is believed to be in Primavera, where Hardman and Co estimate that there is a potential value of 120p per CHP share.

RNS :Updated 22/1/07. Further seismic now obtained and decision not to proceed made because closures too small to be economic and drilling funds earmarked for this project now being retained for use on a more prospective block yet to be announced



Primavera west, Colombia :

55% interest. Two shallow drills in April turned out to be dry. Areas adjacent to this block contain oil (Cana Limon, also in the Mirador basin, the largest oilfield so far, 1.8b barrels) Chaco believe that the area in their block contains the thicker end of a wedge shaped oil-bearing sandstone structure; the area to the east in the neighbouring block has been estimated as containing 400m barrels and the El Miedo oilfield, 8 kms.away has 325m barrels. ANH Contract signed w/c 8/5/06 (1 week sooner than forecast). GED are drilling their neighbouring block in February 2007; two of their targets may contain oil deriving from Chaco's area so some earlier cash flow may result.

RNS : The drilling programme has now been completed but the company has yet to say whether the block will be explored further or abandonned.

New block announced in April known as Tigra in the Magdelana Basin. CHP has a 48.75% interest. Believed to be very promising but company is doing 3-d seismic over the next 18 months with drilling projected in the following 16 months. (Timescales seem to be set to allow a lot of room for delays or speeding up if progress is easier than anticipated)



Curupayty Block, Paraguay :

1.39m hectares in north, close to Bolivia. Two wells previously drilled and both showed oil.

RNS : Expect partnership with larger producer.



San Pedro Block, Paraguay :

1m hectares in south-east. Previous drilling showed oil.

RNS : Expect partnership with larger producer.



Parana Basin, Paraguay :

Canindeyu block covering 1,789,000 hectares. Bordering Brazil. Oil field on Brazilian side already drilled. Chaco also expect to find oil and, at a deeper level, considerable quantities of gas. Chaco has obtained valuable historic seismic for re-evaluation.

RNS : Presidential Decree received 2/11/06.. Petrobras has announced its intention to increase substantially its effort to exploit Paraguay's hydrocarbons and has announced a farm-in on CDS's adjacent block. Possibility that they or another major will do likewise with CHP



Corporate Activity :

CHP obtained an independent evaluation of their exploration assets by Hardman and Co., during July 2006.This is updated monthly. As Chaco Resources line up their assets ready for production they may attract a bid. There are also other actions that the mgt. could take to increase the Chaco's asset share subject to negotiation since the position of the Colombian state oil company, Ecopetrol, is believed to be under review. Other actions could be taken which would have the attraction in bringing more resources to bear on a quicker timeframe plus help streamline the management of their assets. De-merging the Colombian and Paraguayan assets at an appropriate time might hold out some advantages to shareholders at some stage.
Last Placing announced at 15.1p per share on 18/5/06.
Chairman and FD bought shares 8/06 and the Chairman recently exercised his option on further shares which would suggest that he regards the share price to be going north from here on.
Updated 22/1/07.




Here are some dates for your diary courtesy of KJKelly, who posts on ADVFN

1. Curupayty - complete reprocessing of seismic by end July 06
2. Curupayty - complete interpretation of seismic by end August 06
3. Curupayty - decide whether to proceed to drilling or proceed with a farmout campaign - end September 06
4. Platanillo - commence re-entry of Alea 1 early in 1st quarter 2007
5. Primavera - two structural targets will be selected from 10 potential targets for drilling commencing Feb. 2007.
6.Hardman updates should now happen monthly.

KEAYDIAN,
That would be up to you, I said short-term traders were possibly moving on, only they can decide if its a good decision or not.
Personally I'm happy to stay put for the long term and top-up now and then.

Just to put things into perspective, I bought back at the end of last summer, saw the price rise more than 50% and come back to break-even/loss situation. I almost sold out Oct05 but had to reassess why I was holding. Then it went to substantially higher levels and since has retraced again. Sometimes you have to hold your nerve if you believe in the story and have done your research. This summer is seeing a real battering of a lot of stocks and the silly season is far from over. As mentioned above this isn't Chaco specific, more market/geopolitical/risk-adverse focused.

Tanker, To answer your question, no, I don't work for CHP or anyone else, but myself. You seem to be implying that I have ramped up CHP; far from it. I research companies I invest in and am happy to share that with others. CHP does have excellent prospects; right now the market is not too interested in prospects, it wants to see early cash flow.
Some followed me into Griffin Mining a little while ago. It was a bumpy ride at first with all sorts of sp fluctuations due to shorting and deramping; but the quality of the stock won out in the end and it went on to being a 23 bagger for me. Some sold later and made 30 fold. I hope that by sharing what info. one can find that they will share good information with me on other stocks; it happens but not as often as I would like.
As to why the sp is drifting, there are a number of short term problems. I know some are having to settle T trades and that is meaning that they have to sell regardess. The lack of an oil and gas specialist nomad is another and the influence that has had on the Hardman report is noticeable. If I had been running the company I think I would have delayed bothering to publish it until I had a differently skilled nomad
Anyway, if you sell that is your affair; I'm staying put and if other stocks I hold produce opportunities to sell them, and CHP is still sub 15p at the time, I'll buy more.

Sharesure - have a look at WNG, not a stock I currently hold (but want to add) but a new issue with expertise in the air-conditioning field (how appropriate). Their focus is developing the business with medium size hotels across the UK. This I think could be a real development for the future. My main concern about adding at the moment is market sentiment and their reliance on only a few customers.

Greyhound,Thanks, I will.

I always do my own research as theres not many people on here whos views i value enough to put my money on but ive always found sharesures posts to fair-no ramping/deramping......thanks and keep them coming matey !

Topped up again today in the 11's. Still feel it is a good long term prospect and that we'll have a much better sp by Christmas.

We are all aware that a flow of news is on the way at some point so I will be one investor that is waiting to see what happens. To be honest I thought that the report may have moved the price up slightly but I should know better!

Hold tight or sell up and see if the price drops - decisions, decision, decisions.......

Sharesure, i for one am still behind you mate,but not in that sense cos im`e married. Keep up the good posts because at times like these your enthusiasm means a lot to most on this board.
Cheers, pisces.

Alea alone on current reserves supports the current sp.; all the extra potential there plus the prospects of the other blocks on a fully funded drilling programme are in for nothing. The market must be on holiday. Or have I missed something?

Sharesure, unfortunately I don't have the contact network that you do so can't pass back a fraction of what you give here, but as I've mentioned before I like the look of AIMR but only due to my own research.
A bit of a Griffin in the making with some bluesky on the side.

Alea has always been whats kept me calm here and in fact I would not have invested as heavily without it.
I'm not a fan of buying purely on the drill.
The Hardman report estimates $10m of earnings to Chaco from Alea in the 1st year of production which is higher than I was expecting and correct me if I'm wrong but I think that was based on the 20m barrels proven and not accounting for the higher potential estimates.

i am a sharesure fan too. keep up the good work. i DMOR but haven't got the expertise and contacts of you and like it when you fill in the gaps.
Am holding and wishing the market would take an up turn in my other stocks so i could top at these great prices. :)
Alex

i bought in a few days ago at 12.5p small holding - if they go to 10p i will buy a truck load!.

I'm happy to hold and grateful sharesure for you're research and regular posts. My other favourites at the moment with IMO blue sky potential are EPY e-pay asia with a trading update due on 28th July-also CLEA which is a long term hold for me but seems to be doing well. have posted on these but there's very little interest shown here although interest is rising on ADVN board.

Tanker, It was seem that you are as frustrated as many on here regarding the current price of Chaco, the Hardman report told us much what we wanted to hear however it was in my opinion very conservative but at least it puts a vauation of future prospects however it should be remembered there is much more to come in the next few weeks with Chaco and those who are out at present may well regret this.

Sharesure has identified all the upside and has also pointed out short term issues, the market at present makes no sense however with the recent market correction for inflation, potential interest rate problems, and Iran, let alone the current middle east crisis is it no wonder that people have eased back from investing, the AIM being smaller gets hit harder.

Tanker I can assure you Sharesure does not work for anyone, he researches Chaco in depth and probably puts more time and effort into this than anyone I know, I have also met him and he is as genuine a person as you could meet so back off with the snide remarks and cheap shots, perhaps put a bit of effort in your self instead of one liner comments that have no substance.

i have many small wannabe oil stocks in my portfolio/watch list and they have all taken a massive battering. as is usual this time of year. sentiment will be reversed imo especially those who have proven and decent size resource estimates /reserves.

also see a lot of takeovers in these companies (chp similar) in yrs to come. ie the small caps with reserves that the big boys will be after. lets hope chp are one of them?. perhaps goo?.

just my opinion?.

I would like to add my thanks to you sharesure for all you share with us.
I'm sure there are many like me who don't post as they have nothing to add ,but are here on a daily basis .I dmor but your help and insight is always much appreciated.

Thanks to all those who have found what I have posted useful. I am as frustrated as anyone that CHP is not further ahead than it is. That's the market - no doubt at some stage down the line it will push CHP's shares ahead of where they should be as well. For the timebeing in my view it's a case of toughing out this period and hoping that it is short-lived. Although a series of news items are all in the offing, I do believe that CHP are seeking ways to bring forward their drilling programme as quickly as they can; whether that is at Alea or Primovera or both I do not know. As others have added there will be drilling on neighbouring blocks too, something that is particularly relevant in Paraguay so that Hardman can then put some value on this territory. The current nil ascribed value in their report does not make sense but I suspect that is as a result of nomad interference.

Some real good posts here.

Sharesure - Thanks for your posts here and on the other bb. I think Sondex (SDX) is worth a look (although you probably know all about this company already). It is doing some excellent business, it seems to me, but was oversold when the markets wobbled a few weeks ago. It fell from about 320p to 250-ish. It's picking up again now to about 280. The company had a positive write up in The Times yesterday.
As far as CHP is concerned, I am now more heavily invested than I had ever intended but currently in the red. I thought that the 15p placement would give us a solid base but, clearly, I was wrong.
I am baffled as to why we are now at the same level as Feb even though Chaco is in a far better position now than six months ago.
I didn't expect any spectacular effect from Hardman but I certainly didn't think it'd take another series of knocks this week.
I see that the company has a PR firm - I have no idea what their brief/contract is but I can see no evidence of them producing any results.
As I have said on the other bb, I really do think Chaco has some great stuff to talk about (and thanks to Hardman it would be an easy write-up from a journalist's point of view). It would be a shame if this opportunity was lost as some press coverage would be a fillip for us all. I know media coverage can have short-term benefits only but the drip-drip effect of Chaco being written about does give investors confidence over the longer term.
Good luck everyone.